Markets gave us major whiplash on Wednesday. SPY opened a small 0.01% lower, DIA gapped down 0.27%, and QQQ gapped up 0.23%.  However, at the point, all three major index ETFs sold off sharply and steadily for about 60-75 minutes. Then we saw momentum switch flipped and all three rallied sharply and steadily for the rest of the day. Only profit-taking the last five minutes kept us from closing at the highs in all three major index ETFs.  This action gave up large white-bodied candles with large lower wicks.  SPY and DIA were white Hammer type candles while QQQ had a larger body.  All three crossed above their T-line, although DIA closed only slightly above its 8ema.  This happened on average volume in the SPY and DIA as well as well-above average volume in the QQQ.

On the day, seven of the 10 sectors were in the green, with Technology (+2.43%) way, way (more than 1.25%) out front leading the Bulls higher. On the other side, Consumer Defensive (-0.60%) lagged well behind the other sectors.  Meanwhile, SPY gained 1.03%, DIA gained just 0.25%, and QQQ popped 2.17% higher.  VXX dropped another 4.25% to close at 49.33% and T2122 rose up into the center of its mid-range at 47.68.  At the same time, 10-Year bond yields rose to close at 3.655% while Oil (WTI) jumped up another 2.37% to close at $67.31 per barrel on potential hurricane impact.  So, on Wednesday saw the Bears trying to make hay on flat CPI numbers until a major mid-morning reversal ripped their faces off and did not let up the rest of the day.  As usual, NVDA led the market on the dollar-volume of stock traded, but this time also chipped in with a strong 8.15% gain.  

The major economic news scheduled for Wednesday included August Core CPI (month-on-month), which rose a tick to +0.3% (compared to the +0.2% forecast and July reading).  However, on the annual basis August Core CPI was flat at +3.2% (versus a forecast and July value of +3.2%).  On the headline front, the month-on-month August CPI was flat at +0.2% (compared to a forecast and July reading of +0.2%).  On the year-on-year basis, August CPI was down sharply to +2.5% (right on the +2.5% forecast but down sharply from July’2 +2.9% value).  Later, EIA Weekly Crude Oil Inventories were down, about as expected, at +0.833 million barrels (versus a +0.900 million barrels forecast but up sharply from the prior week’s -6.873 million barrels number). 

In “here we go again” news, we are facing another potential government shutdown at the end of September.  Yet again, the GOP has put off either a budget or a continuing resolution to the last minute.  And just as in so many times before, GOP in-fighting has stopped progress as the deadline looms.  This time, a previously-scheduled vote on a Republican-dictated bill was canceled for Wednesday because the House Speaker did not want to go through the embarrassment of previous vote failures.  So, the Speaker told reporters that the Republican caucus will “work through the weekend” to try to get enough votes for their partisan bill, which he hopes to put up for a vote next Tuesday.  In the meantime, we wait for the next act in this play as the calendar ticks down with less than three weeks left.

In Fed news, on Wednesday the Fed Office of the Inspector General released a report saying its investigation had found that Atlanta Fed President Bostic had created the appearance he had traded on confidential Fed information 154 times between March 2018 and March 2023.  The report said there was no evidence Bostic actually traded on inside information.  However, his investment managers (who traded his personal account) had made trades 154 times during Fed “blackout periods” just ahead of FOMC announcements.  In addition, the investigation found that Bostic filed inaccurate financial disclosure forms, held more Treasuries than the Fed permits, and twice made trades that were different than what he had gotten pre-approval from the Fed to make.  The Fed Board of Governors will now review the report and decide appropriate action.

In stock news, on Wednesday STLA announce it will invest $406 million to retool three MI facilities to build components that can be shares between hybrid and all-electric vehicles.  At the same time, GME announced it would be issuing up to 20 million more shares of stock to raise cash for “general corporate purposes.”  (GME closed down almost 12% on the news.)  Later, ADBE announced it will release a new AI-powered video creation and editing tool later this year.  At the same time, SEC filings showed that BRKB had sold another 5.8 million shares of BAC between September 6 and September 10.  (That takes the BRKB offloading of BAC to almost 175 million since mid-July.)    Later, RHHBY (Roche) reported disappointing early-stage trial results or its weight-loss pill. 

Elsewhere, the CEO of RTX told an investor conference that he does not see any available “transformative M&A deals” in the aerospace industry and he is open to paring down the RTX business by pruning (selling) certain units.  Later, Reuters reported that BA is facing a possible strike Friday in the Pacific Northwest.  It seems that despite a tentative deal, which workers vote on ratifying on Thursday, many of the workers are enraged by the deal because it offers a much lower pay increase and other benefits that had been sought.  At the same time, AMZN announced it will invest $1.8 billion, this time in Brazil and by 2034, to add to its AWS cloud computing capacity. Later, NSC officially terminated its CEO (for an inappropriate relationship with the company’s top legal officer) and replaced him with the CFO.

In stock legal and governmental news, on Wednesday, a number of business trade and lobbying groups came out in favor of Nippon Steel’s acquisition of X while trying to also not criticize their target (politicians).  The letter said the signers were “concerned the decision is being unduly influenced by political pressure.”  (However, both sides of the political aisle are strongly and publicly against allowing the acquisition.)  Later, a US District judge ruled in favor of an industry group (whose members include META, GOOGL, and SNAP) and against a UT state law requiring social media platforms to verify user age and restrict the accounts of minors. At the same time, Semaphore reported that the US Dept. of Commerce is close to approving the export of advanced NVDA AI chips to Saudi Arabia. 

Elsewhere, after the close, the CFPB ordered TD to pay $28 million for repeatedly sharing inaccurate, negative information about its customers with credit reporting agencies, hurting customer credit scores.  At the same time, the EU’s top privacy regulator announced it has opened an investigation of GOOGL over its AI use of European consumer personal data.  Later, EA, MSFT (Activision division), and TCEHY (Tencent) were among the companies hit with an EU consumer complaint over “tricking” children game players into spending more money via in-game currencies. At the same time, evidence was presented at GOOGL’s ad network antitrust trial that an ex-executive told company employees that the goal was to crush rival ad networks. 

In miscellaneous news, on Wednesday Reuters reported that Korean-listed electronics giant Samsung will cut up to 30% of its “overseas staff” across the Americas, Europe, Asia, and Africa.  Samsung is the world’s leading producer of smartphones, memory chips, and TVs and has more than 147,000 employees outside of South Korea.  The report said the cuts had already begun in India.  Reuters reported that the story had been confirmed by six Samsung sources.  Elsewhere, about 39% of US Gulf of Mexico oil production and 49% of US natural gas production in the area were shut down on Wednesday due to Hurricane Francine.  Meanwhile, Rho Motion reported that global electric vehicle sales were up 20% in August, despite a 33% decrease (which caused a 19-month low) in Europe. The increase was driven by record sales in China, which were up 42%.  

Overnight, Asian markets were mostly green with nine of the 12 exchanges closing above break-even.  Japan (+3.41%), Taiwan (+2.96%), and South Korea (+2.34%) led the region higher.  In Europe, we see green across the board at midday.  The CAC (+0.78%), DAX (+1.09%), and FTSE (+0.73%) lead the region higher in early afternoon trade.  In the US, as of 7:30 a.m., Futures are pointing toward a modestly green start to the day.  The DIA implies a +0.14% open, the SPY is implying a +0.12% open, and the QQQ implies a +0.06% open at this hour.  At the same time, 10-Year bond yields are up to 3.668% and Oil (WTI) is up 1.75% to $68.49 per barrel in early trading.

The major economic news scheduled for Thursday includes Weekly Initial Jobless Claims, Weekly Continuing Jobless Claims, August Core PPI, and August PPI (all at 8:30 a.m.), WASDE Ag report (noon), August Federal Budget Balance (2 p.m.), and the Fed Balance Sheet (4:30 p.m.)  The major earnings reports scheduled for before the open include Thursday, we hear from BIG, CAL, KR, and SIG.  Then, after the close, ABDE and RH report.

In economic news later this week, on Friday, we get August Export Price Index, August Import Price Index, Michigan Consumer Sentiment, Michigan Consumer Expectations, Michigan 1-Year Inflation Expectations, and Michigan 5-Year Inflation Expectations.

In terms of earnings reports later this week, on Friday, there are no reports scheduled.

So far this morning, SIG beat on both the revenue and earnings lines.  However, CAL missed on both the top and bottom lines.  (KR reports at 8 a.m.)

In overnight news, MRNA announced plans to cut $1.1 billion in costs by 2027 on expectation of a rapid decline in its COVID vaccine business.  However, the company also said it expects to have 10 new biotech products approved over that same period.  Meanwhile, MCD announced it will extend its “$5 value meal” program through the end of the year in most US markets.  (Approximately 80% of MCD franchisees have chosen to do this program extension.)  Elsewhere, Bloomberg reports that both JPM and BAC are rolling out programs to reduce junior staff workloads.  JPM will limit MOST junior staffers to only 80 hours per week.  At the same time, BAC is rolling out a so-called “Banker Diary” system to track individual employee workloads.  (I’m sure that in no way will be used for analyzing and ranking employee productivity.)

With that background, all three major index ETFs opened the premarket higher, but have printed small and indecisive (mostly wick) candles since that point. All three are above their T-line (8ema). So, the short-term trend is bullish. At the same time, the mid-term trend is mixed at best with the QQQ now bearish. In the longer-term we still have a Bull trend with the DIA, SPY, and QQQ. In terms of extension, none of the three major index ETFs are extended, having just re-crossed their T-lines. At the same time, the T2122 indicator is back in the center of its mid-range. So, markets have room to run either direction if one side or the other can find momentum. With regard to those 10 big dog tickers, eight of the 10 are in the green this morning, led higher by GOOGL (+1.15%). On the other side, TSLA (-0.54%) is the laggard. Interestingly, normalcy has returned to the pre-market dollar-volume with NVDA having traded more than six times as much stock as the next closest ticker.

As always, be deliberate and disciplined…but don’t be stubborn. If you have a loss, admit you were wrong and take that loss before it gets out of hand. And when the price does move in your direction, always move your stops in your favor and take a little profit off the table. You have to keep the “Legend of the Man in the Green Bathrobe” in mind. In a winning situation, it is NOT HOUSE MONEY you’re betting, it’s YOUR MONEY! There is no reason to keep raising your bet (risk) size just because you’ve had a win. Finally, remember that trading is not a hobby, it’s a job. The gains are real and so is the risk. So, treat it that way. Do the work and follow the process. Stick to your trading rules, trade with the trend, and take those profits when you have them. Do the work!

See you in the trading room.

Ed

🎯 Mike Probst: Rick, Got CTL off the scanner today. Already up 30%. Love it.

🎯 Dick Carp: the scanner paid for the year with HES-thank you

🎯 Arnoldo Bolanos: LTA scanner really works $$, thanks Ed.

🎯 Bob S: LTA is incredible…. I use it … would not trade without it

🎯 Malcolm .: Posted in room 2, @Rick… I used the LTA Scanner to go through hundreds of stocks this weekend and picked out three to trade:  PYPL, TGT, and ZS.   Quality patterns and with my trading, up 24%, 7% and 12%…. this program is gold.

🎯 Friday 6/21/19  (10:09 am) Aaron B: Today, my account is at +190% since January. Thanks, RWO HRC Flash Malcolm Thomas Steve Ed Bob S Bob C Mike P and everyone that contributes every day. I love our job.

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